But following an undeniably rocky road the little
digital currency that could appears to be having the last
laugh. A good read can be
found here on how Bitcoin is beginning to
go mainstream.

At this stage the obvious first question is why has
the decentralized, 100% digital currency proven so
resilient? Scientific
American provides one good answer:

When they (a merchant) finalize a deal in Bitcoin, they do so
knowing that the transaction can never be reversed. The Bitcoin
network doesn't edit its ledger. As such, merchants no longer
have to worry whether they are charging a stolen credit
card.

"'The fraud mitigation is big for Internet merchants, because
they are all handling card-not-present transactions. And the
business has to eat the loss if the payment is reversed later
on,"' Gallippi says. "'Using Bitcoin, a business can receive a
payment from any country on the planet, instantly, with no risk
of fraud."'

In addition to helping cut down on fraud costs
for merchants, Bitcoin is chic.
Using Bitcoins to transact business is a mark of digital savvy
for both tecno hipsters and the merchants who cater to
them.

What the future ultimately holds for Bitcoin is less
interesting to me than a more general issue, which is the
apparent growing trend in alternative currencies coming into
existence.

We have already seen some Congressional saber rattling about
Bitcoin prior to its flash crash. Will governments continue to
tolerate it, Bristol's new pound note, etc., while they remain
small? Or will we see a more formal move in the not too distant
future to stamp out these fledgling alternatives to government
fiat money? As the article points out, government's might have a
hard time shutting down Bitcoin:

But perhaps most consequential for the future of Bitcoin—in
order to shut down a peer-to-peer currency exchange, one would
have to terminate every node on the network. The few lawyers
who have studied Bitcoin all agree that the currency inhabits a
legal gray area. No one really knows how governments would
react if it gains traction, but many consider the exchanges to
be the easiest target for people who want to regulate Bitcoin.
Decentralizing the exchanges would make that job nearly
impossible. Bitcoin developers are quickly proving that they
can design decentralized alternatives to even the most
sophisticated financial institutions.